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National PX v/s Many (Region Level) Exchanges

S UMMARY of N VVN’S VIEWS & SUGGESTIONS on C ERC STAFF PAPER ON DEVELOPING A COMMON PLATFORM FOR ELECTRICITY TRADING. National PX v/s Many (Region Level) Exchanges. Assignment of Transmission Capacity to Day-Ahead Trading Through PX. Bids Based On Marginal Costs. Price Mitigation.

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National PX v/s Many (Region Level) Exchanges

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  1. SUMMARYofNVVN’S VIEWS & SUGGESTIONSonCERC STAFF PAPER ON DEVELOPING A COMMON PLATFORM FOR ELECTRICITY TRADING

  2. National PX v/s Many (Region Level) Exchanges

  3. Assignment of Transmission Capacity to Day-Ahead Trading Through PX

  4. Bids Based On Marginal Costs

  5. Price Mitigation

  6. Congestion Management

  7. Treatment of Transmission Charges

  8. Treatment of transmission losses

  9. Organization of PX

  10. Organization of PX (Contd.)

  11. Market Regulation

  12. Timing for launching PX

  13. Developing a Common Platform for Electricity Trading in India

  14. Mandatory v/s Voluntary Participation in PX

  15. Double-sided Bidding v/s Only Supply Side Bidding

  16. Uniform Pricing v/s Discriminatory Clearing Pricing

  17. Day-Ahead v/s Same Day Exchange

  18. Time blocks for bidding

  19. Operational Inflexibilities of Generators

  20. Time line for PX

  21. Other benefits of PX

  22. Settlement & Clearance Mechanism

  23. DEVELOPMENTOFPOWER EXCHANGE AT NATIONAL LEVEL NTPC Ltd NVVN Ltd

  24. An initiative forSelection of PX Model for India • Analysis of Indian Electricity Trading Market • Study of International Electricity markets • Consultations with MoP, CEA, PGCIL and PTC • Development of DPR for PX in India Consultants: Consortium of M/s NordPool Consulting AS, Norway and M/s CRISIL, India

  25. Preparatory Work Done • A professionally prepared DPR • Consultations with other stakeholders during preparation of DPR • Core Team • Workshop for stakeholders • Full implementation plan available • Hardware & software issues • Procurement, Training & Implementation • Model Agreements • Business Case

  26. Our Proposal • Power Exchange may be promoted as a separate company by key players in power sectors and gradually provided with more diversified ownership and governance structure. CERC Staff Paper on PX also recommends a diversified ownership. It is common to find examples of PX promoted by the stakeholders in European Markets. • Development of Power Exchange for physical delivery market is complex due to nature of electricity. Therefore, the design of the product, trade system and operational procedures require a thorough understanding of generation, transmission, consumption and trading of electricity as well as system operation.

  27. Our Proposal • The focus of PX is market development. In India, the trading market is small and limited to tradable short-term surplus. Therefore support and participation by market players is crucial for market development. • CPSUs under the MoP are respective market leaders, possess significant domain knowledge, technical & managerial expertise and financial strength. They also have an experienced pool of necessary manpower to support the creation and operation of PX. Further, the Government Companies playing a leading role in the development of PX shall provide significant comfort to the market participants with regard to neutrality and transparency.

  28. Our Proposal • Accordingly, the following may be considered for establishing the Power Exchange: • Power Exchange shall be promoted as a separate company under the Companies Act with CPSUs under MoP as the initial promoters, who shall contribute Initial 50% of the authorized capital in equal proportion. (Authorized capital shall be of the order of Rs. 50 crores.) • Balance 50% of the authorized capital shall be issued subsequently to State power utilities, FIs, Banks, Traders etc. • Shareholding by an individual entity may be limited to 25% of the paid-up capital. • The Company shall have Shareholders’ representatives and also the nominee of CERC/ Government in suitable proportion on its Board of Directors.

  29. Thank you

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